Few things are as entrenched in corporate culture as the performance review. You know the drill. Once a year you go into your boss’s office to hear what you’ve been doing right and wrong for the last 12 months and to find out if you’re getting a salary increase. Regardless of what field you work in or your level in the organization, you’ve probably been through this type of performance review. It’s almost universal. However, a growing body of evidence suggests that this is a completely backwards way to go about performance management. Consider the limitations of the traditional annual employee performance appraisal.

Problems with the Traditional Annual Performance Appraisal

It’s annualOne of the basic principles of psychology is that for reinforcement (positive or negative) to be effective, it needs to be delivered as closely in time as possible to the behavior it’s trying to impact. Telling an employee in September about something they should have done differently in March not only means that you missed the opportunity make a course correction six months earlier, it also means the constructive criticism you’re offering is less likely to be heard.

Of course, the very scenario assumes that the manager who’s doing the review in September remembers what the employee did in March. Is that really likely? We are busy human beings with a lot of information competing for space in our memories. More often than not, the “annual” review reflects the employee’s performance over the past several weeks rather than the past year.

It’s linked to a potential pay increaseSo it only happens once a year and it directly informs the decision as to whether or not the employee gets a salary increase. Wow. That’s a lot to have riding on one meeting and one document. Linking an annual review to a salary increase makes “getting a good review” more important than doing one’s best at work. It’s like the equivalent of “teaching to the test” in academia. Is the goal to have positive performance reviews or is the goal to help the employee develop to their full potential and make the greatest possible contribution to the organization?

It’s based on one person’s opinionEven though we try to be inclusive, having the employee participate in the discussion of what’s stated in the review, and then giving them a chance to “acknowledge without agreeing,” the traditional performance appraisal process is very top down. It’s basically one person’s opinion of another. As such, it’s subject to the personal prejudices we all have. Those prejudices exist regardless of whether or not we want to acknowledge them. Consider all the documentation that suggests the same actions that result in a man being labeled “self-motivated” or a “leader” often lead a woman to be called “abrasive”.

A Better Way of Doing Performance Reviews

The good news is, there’s another way to do it. Best practices exist for making performance reviews less formal and more effective. These include:

Frequent feedbackGiving employees frequent feedback on their performance (at least quarterly) makes the review process less stigmatized, and more effective. Course corrections take place sooner rather than later and reviews are one element in a comprehensive system that is designed to bring out the best in each employee.

Focusing on objectivesSetting specific, actionable objectives that align with the organization’s goals should be at the heart of the review process. This allows the employee to see how their work fits into the organization as a whole, and defines the objectives their performance will be measured against. That way there are no surprises when the employee’s performance is assessed.

One of many tools for managing employee performanceOne form, completed by one manager should not be the only way an employee’s performance is measured. 360 Degree Reviews collect feedback from coworkers, direct reports, managers and sometimes even consultants and suppliers to paint a more accurate picture of an employee’s performance. An employee assessment can also include other documents such as an individualized professional development plans and succession plans. Managers and employees can work on these documents together, on a continuous basis, to make employee performance management organic, ongoing and, most importantly, useful.

The ProForma library of template processes for Jira or Jira Service Desk includes multiple options for managing employee performance. Check out the full suite of HR templates.